Community Attributes Inc. tells data-rich stories about communities that are important to decision makers.

President & CEO Chris Mefford

Project Manager Spencer Cohen, PhD

Analysts Madalina Calen Robert Douglas Maeve Edstrom Maureen McLennon Carrie Schaden Sean Volke

Community Attributes Inc. 500 Union Street, Suite 200 Seattle, Washington 98101

www.communityattributes.com

This page was intentionally left blank

C ONTENTS Introduction ...... 1 Background and Purpose ...... 1 Methods ...... 1 Outline of Report ...... 2 Overview of Global Trade and Supply Chain Management ...... 3 Definition of Global Trade and Supply Chain Management Sector ...... 3 Infrastructure Assets ...... 6 Workforce System ...... 12 Origin and Destination Markets and Cargo Handling ...... 15 Direct Activities ...... 19 Jobs, Wages, Business Revenues ...... 19 Occupations in Other Industries and Total Sectoral Direct Impact ...... 23 Economic Impacts of the Sector ...... 25 Illustrative Companies ...... 27 Transportation, Distribution, and Logistics (TDL) ...... 27 Supply Chain Management in Other Industries ...... 32 Supply Chain Services ...... 32 Strategies for Supporting continued Growth in the Sector ...... 34 Summary and Conclusions ...... 35 Appendix A. Interview List ...... 36 Appendix B. Full List of Programs Offered in Washington State ...... 37 Appendix C. Economic Impact Technical Appendix ...... 41

I NTRODUCTION

Background and Purpose Washington state is one of the most trade dependent states in the nation. According to U.S. Customs data, in 2017, more than $77.0 billion in merchandise and commodities originating in Washington were exported to overseas markets. These exports included not just airplanes, but also medical devices, agriculture commodities, machined parts, processed foods and many other Washington-made products. Washington’s ports, led by the Northwest Seaport Alliance and non-containerized operations at the ports of Seattle, Tacoma, Grays Harbor and Everett, and air cargo out of Sea-Tac International Airport are also key purveyors of trade between other parts of the U.S. and the world. These ports facilitated the movement of $80.2 billion in exports and more than $92.0 billion in imports in 2017, including products from or destined to domestic markets as far as the U.S. Midwest, making this region one of the most important centers for containerized, bulk and breakbulk shipments in the country.

Behind these large trade flows exists an extensive network of service providers and logistics operations that comprise the Global Trade and Supply Chain Management sector. These include companies and organizations specializing in marine terminal operations, air freight shipments, supply chain management, freight forwarders, trade finance and trucking, as well as the ports, educational institutions and state and federal government agencies. In addition, there are many related operations and personnel within trade-reliant industries in Washington, such as global logistics and supply chain managers at The Boeing Company.

This study evaluates the size, breadth, geographic diversity and economic impacts of this sector, including quantifying the number of jobs, income and business revenues in subsectors. This report concludes with a set of recommendations to the Center of Excellence for Global Trade & Supply Chain Management, grounded in this research, for supporting the Global Trade and Supply Chain Management sector going forward.

Methods This analysis leverages multiple data sources, including employment data series published by the Washington State Employment Security Department (ESD) and U.S. Bureau of Labor Statistics, revenue data from the Washington State Department of Revenue (DOR), personal income and self- employment data from the U.S. Bureau of Economic Analysis and trade data from the U.S. Census Bureau. Estimates were then validated or adjusted based on interviews with industry representatives and auxiliary information

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 1 SECTOR ANALYSIS

and data sources. Economic impacts were calculated through use of the Washington State Input-Output (I-O) Model.

Definitions Throughout this study, the Global Trade and Supply Chain Management sector is reported in two segments, defined as follows:

• All-in activities. Firms and industries primarily engaged in global trade and supply chain management, or what will be referred to as “all-in” activities. • Other leading occupations. Additional jobs, wages, and revenues associated with workers engaged in global trade and supply chain management in other industries across the economy. Outline of Report The remainder of this report is organized as follows:

• Overview of Global Trade and Supply Chain Management. A review of the sector definition and summary of key activities. • Workforce System. Educational institutions that support the sector. • Direct Activities. Key measures of the sector, including jobs, income, revenues and leading occupations. • Economic Impacts. Additional jobs, income and revenues supported through multiplier effects statewide. • Strategies for Supporting Continued Growth in the Sector. Key education issues identified by industry stakeholders. • Summary and Conclusions. Review of key findings.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 2 SECTOR ANALYSIS

O VERVIEW OF G LO B A L T RAD E AN D S U PP LY CHAIN M ANAGEMENT

Definition of Global Trade and Supply Chain Management Sector The Global Trade and Supply Chain Management sector includes a range of activities involved in facilitating the movement of goods between businesses, intermediate users and final consumers. Exhibits 1 and 2 below present a description and schematic rendering of the sector, taking into consideration businesses and activities central to the movement of goods (Transportation, Distribution, and Logistics), critical infrastructure, supporting services, other businesses in Washington engaged in procurement and supply chain management (e.g., procurement and compliance divisions within larger manufacturers) and educational institutions whose mission is to provide needed human capital to support these activities.

Exhibit 1. Description of Segments of Sector

Illustrative Companies Segment Subsector/Activity Description and Organizations Domestic and international freight Tote Maritime, Foss Marine cargo shipping vessels, e.g., Tote, as well as Maritime supporting operations such as tugs. Movement of cargo from one mode BNSF, UP, SSA Marine, Transloading & to another and consolidation and MacMillan-Piper, Oak intermodal repackaging of goods, including Harbor Freight Lines. between container sizes. Transportation, Air cargo jobs at Freight airlines (e.g., Air China) and Distribution & Alaska Airlines and Air cargo shipping air cargo ground-handling Logistics Delta, Hanjin Global operation. Logistics, Swissport. Freight arrangement and 3rd Party Expeditors Freight forwarding Logistics International Lineage Logistics and Dry and cold storage facilities and Warehousing & storage Radiant Global packaging. Logistics Couriers Express delivery services DHL, FedEx, UPS Procurement and supply Procurement, sales, import and Supply chain and chain management Supply Chain export of finished and/or procurement units across local Management intermediate goods and materials, within local manufacturers, customer service. manufacturers. wholesalers, shippers U.S. Bank, Bank of Letters of credit and other short-term Trade Finance America, Washington lending for exporters and importers. Trust ITAR and other regulatory Supply Chain Compliance Dorsey Whitney LLP compliance issues. Services Assistance with federal guidelines on Customs brokers BNSF Logistics, Lynden importing and exporting. Consulting/Market Research on market opportunities. Bryant Christie research

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 3 SECTOR ANALYSIS

Exhibit 2. Infographic of Global Trade & Supply Chain Management Sector

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 4 SECTOR ANALYSIS

Transportation, Distribution and Logistics Transportation, Distribution and Logistics, or “TDL,” refers to activities directly engaged in the movement of goods, either to/from international or domestic sources and destinations. TDL activities include:

• Transloading and intermodal—the movement of cargo from one mode to another, such as from a maritime vessel to a train. Transloading includes marine and air cargo handling, terminal operators, airport ground-handling services, courier services, trucking companies (long-haul and drayage activities), rail operators and the consolidating and repackaging of cargo, often between 40-foot and 52- foot containers. • Freight forwarding entails a suite of services on behalf of shippers. These include tracking inland transportation, preparation of shipping and export documents, warehousing, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance and filing of insurance claims. • Warehousing and storage, including dry storage and refrigeration facilities for perishable goods. • Materials handling—firms specializing in the handling of bulk and breakbulk goods, such as grain and industrial machinery. Supply Chain Management in Other Industries Many of the skills necessary within TDL operations can be found in other sectors of the economy, such as among local manufacturers, many of whom have internal staff tasked with managing procurement, logistics, sales, customer service and trade finance. For example, in 2017, the aerospace industry in Washington state employed more than 3,800 logisticians, based on Washington State Employment Security Department data.

A large share of trade is either between businesses, such as between The Boeing Company and its network of suppliers, or between producers and wholesalers who then further distribute products to retail operations.

Supporting Services An extensive ecosystem of businesses and government agencies provides critical services to facilitate global and domestic trade. These include trade finance, state and federal export assistance programs, trade associations, market research firms and compliance services, the latter including law firms specializing in fields such as export controls.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 5 SECTOR ANALYSIS

Infrastructure Assets Washington’s Global Trade and Supply Chain Management sector begins with an extensive transportation system and network of infrastructure assets. Washington state is home to 75 public ports, ranging from major containing loading centers such as the Ports of Tacoma and Seattle (Northwest Seaport Alliance), breakbulk operations at the Port of Grays Harbor, to smaller ports along the Columbia and Snake Rivers serving the bulk grain trade.

Rail Network There are over 3,000 miles of railroad lines in Washington state (Exhibit 3). These include two class I railroads—Burlington Northern Santa Fe (BSNF) and Union Pacific—and 23 short-line railroads, many supporting the agriculture industry in Eastern Washington. The Washington State Department of Transportation (WSDOT) owns the Palouse River and Coulee City (PCC) rail system, the longest short-line freight rail network in Washington. WSDOT contracts with private railroads to operate each of the branches.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 6 SECTOR ANALYSIS

Exhibit 3. Map of Major Rail Lines in Washington State

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 7 SECTOR ANALYSIS

Seaports and Riverports Washington has 45 ports situated along Puget Sound, the Pacific Coast and inland rivers. These include 11 deep-draft seaports, capable of handling ocean-going vessels and containerized cargo, and 17 barge intermodal facilities handling bulk or breakbulk cargo on the Columbia and Snake Rivers.1 In 2017, Washington state seaports handled $67.0 billion in containerized traffic (imports and exports), in addition to grain, heavy duty machinery, vehicles and other bulk and breakbulk goods.

Washington’s seaports serve as important gateways to trade across the Pacific Rim, and they are major loading centers for discretionary cargo either originating or destined for other parts of the United States. On-site facilities include container and breakbulk terminal operations, warehousing, cold storage, grain terminals and on-dock rail and drayage operations. Ports are also vital to Washington’s agricultural industry. In 2015, an estimated $519.5 million in fresh apples was exported through the state’s public ports. Apple exports in turn supported 9,110 jobs, largely impacting counties in Eastern Washington.2

The Northwest Seaport Alliance is a marine cargo partnership of the Ports of Seattle and Tacoma. Its facilities are major centers for containerized traffic, bulk, breakbulk, project/heavy-lift cargoes, automobiles and trucks. In addition to providing a domestic gateway to Alaska, its international trading partners include China, Japan, South Korea, Canada and others. The Northwest Seaport Alliance was formed in 2015, and between the Ports of Seattle and Tacoma, it has 10 container terminals with 23 berths and 47 cranes, as well as 7 non-container terminals mainly used for breakbulk cargo.3 Other container ports in the state include the Ports of Grays Harbor, Bellingham, Olympia, Everett, Longview, Kalama and Vancouver.4

Bulk and breakbulk cargo is handled at several ports across the state. These include the Port of Grays Harbor (soybeans, automobiles, compressed natural gas), the Port of Everett (aerospace parts, logs), the Port of Vancouver USA

1 Washington State Department of Transportation, “Marine Freight,” https://www.wsdot.wa.gov/Freight/Marine.htm (accessed June 18, 2018). 2 Washington Public Ports Association, “Washington State Public Ports Economic Impact Analysis,” 2017. 3 The Northwest Seaport Alliance, “Facilities Guide,” https://www.nwseaportalliance.com/sites/default/files/nwsa_mapbrochure_5- 2016_web.pdf (accessed June 18, 2018). 4 Washington State Department of Transportation, “Marine Ports and Navigation Plan,” 2017, https://www.wsdot.wa.gov/NR/rdonlyres/95926DE6-98B7-4470-BE87- 14427F780C86/0/FreightPlanAppendixBMarinePortsNavigationPlan.pdf.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 8 SECTOR ANALYSIS

(grain, automobiles, steel) and the Ports of Longview and Kalama along the Columbia River (grain, steel, petroleum coke).5

The Port of Grays Harbor has four terminals and was the second port district established in the state after the Port of Seattle. In recent years, the Port of Grays Harbor has transformed its terminal operations from a heavy dependence on forest products to a diverse cargo mix.6 In 2013, the Port opened new infrastructure to process automobiles through the roll-on/roll-off capabilities of Pasha Automotive Services.7

Airports There are 28 public port-owned airports in Washington. The largest of these is Seattle-Tacoma International Airport, which is the state’s hub for passenger travel and air freight, followed by King County International Airport and Spokane International Airport. These three airports dominate the air cargo market in Washington state.8 Many smaller, regional airports do not offer passenger services but are critical in connecting rural goods to larger cargo networks.

Several of Washington’s industries favor the use of air cargo. The cherry industry, for example, relies on air freight because cherries are time- sensitive and require refrigeration for export. In 2016, cherries comprised over 23 percent of exports from Sea-Tac International Airport, the largest share of any category.9 Other major industries that utilize air freight include aerospace and medical devices. Each of these cargoes find certain advantages in air transportation, such as speed and security.

Air cargo carriers can be divided into three categories:10

• Combination carriers, like Delta, store cargo in the belly of passenger aircraft to transport goods between airports.

5 Ibid. 6 Port of Grays Harbor, “Port of Grays Harbor Info,” http://www.portofgraysharbor.com/about/index.php (accessed June 18, 2018). 7 The Pasha Group, “Automotive Services at the Port of Grays Harbor,” https://www.pashagroup.com/brochures/134/automotive-services-port-grays- harbor (accessed June 18, 2018). 8 WSP, “Washington State Air Cargo Movement Study,” April 9, 2018, http://leg.wa.gov/JTC/Documents/Studies/AirCargo/AirCargo_presentation_04091 8.pdf (accessed June 18, 2018). 9 Community Attributes, “Sea-Tac International Airport Economic Impacts,” January 2018, https://www.portseattle.org/sites/default/files/2018- 02/180131_CAI_sea_tac_airport_economic_impacts.pdf (accessed June 18, 2018). 10 Washington State Legislature Joint Transportation Committee, “Washington State Air Cargo Movement Study,” November 15, 2017: http://leg.wa.gov/JTC/Meetings/Documents/Agendas/2017%20Agendas/Nov%2020 17/Air%20Cargo%20presentation.pdf (accessed June 18, 2018).

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 9 SECTOR ANALYSIS

• All-cargo carriers, like Alaska Airlines, operate at least a portion of their fleet as cargo-only aircraft transporting goods between airports. • Express freighters, like FedEx and Amazon (Prime Air), have integrated capabilities across the supply chain. These companies use internal operations in freight forwarding, ground handling and air cargo to deliver goods ‘door-to-door.’ Congestion threatens economic competitiveness and the health of the air cargo industry, as addressed by the Washington State Legislature and private stakeholders. This is caused by stress to one or many supply chain components, leading to increases in costs to shippers as cargo volumes approach capacity. To be efficient, therefore, air cargo relies on support services and connections with other industries such as road transportation, warehousing and handling systems.

Roadways and Surface Transportation There are over 7,000 miles of highways in Washington state, in addition to thousands of miles of roads. According to the Washington State Department of Transportation, trucks move an estimated $42 million of freight on roadways in the state every hour of every day. The mobility of freight into, out of, within and through the state is integral to its economy and jobs. 11

Truck freight corridors are densest in the Puget Sound region, followed by Spokane, Vancouver and the region between Yakima and the Tri-Cities. The state’s interstate highways constitute the main veins of ground transportation. The four most critical interstate highways (classified as T-1) move more than 10 million tons of freight per year (Exhibit 4).12

• Interstate 5 connects Mexico and Canada along the West Coast, running north-south up through the major cities of Vancouver, Tacoma, Seattle, Everett and Bellingham. • Interstate 90 crosses the North American continent from Seattle to Boston, running east-west through Seattle, Spokane and Washington’s agricultural areas. • Interstate 405 is a north-south auxiliary serving the Eastside area of King and Snohomish Counties, including the cities of Renton, Bellevue, Kirkland and Bothell. • Interstate 82 connects Interstate 90 and Oregon, serving as a major route for Yakima, the Tri-Cities and developed farmland in the region.

11 Washington State Department of Transportation, “Trucking,” http://www.wsdot.wa.gov/Freight/Trucking/default.htm (accessed June 18, 2018). 12 Washington State Department of Transportation, “Freight and Goods Transportation,” http://www.wsdot.wa.gov/Freight/fgtS/ (accessed June 18, 2018).

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 10 SECTOR ANALYSIS

Exhibit 4. Washington State Truck Freight Corridors

CENTER OF E XCELLENCE FEBRUARY 2019 P A G E 11 SECTOR ANALYSIS

W O RK FO R C E S YSTEM

Washington’s educational system for training students for fields in global trade and supply chain management includes certification programs, associate’s degrees, Bachelor of Applied Science and BA and BS degrees, and master’s degrees programs. Illustrative programs are detailed below, and a full list of educational institutions and programs can be found in Appendix B.

Highline College Students at Highline College with an associate degree can earn a Bachelor of Applied Science degree in Global Trade and Logistics. This program provides skills and knowledge relevant to current professionals in the supply chain sector, as well as students positioning themselves to enter this sector prepared. It is offered in collaboration with Central Washington University’s Supply Chain Management certificate program. Highline also offers an AAS degree in International Business and Trade. The Center of Excellence for Global Trade and Supply Chain Management located at Highline College additionally conducts research, provides training and connects students with industry members.

Lake Washington Institute of Technology (LWTech) Located in Kirkland, Washington, Lake Washington Institute of Technology offers a Bachelor of Applied Science degree in Transportation, Logistics, and Supply Chain Management. This program is designed for students who have previously earned an associate degree, and it aims to prepare them for supply chain management positions. LWTech’s Diesel and Heavy Equipment Technician program is also relevant, educating and mentoring students in the latest technology, equipment and systems that power Washington state’s supply chain sector.

University of Washington The largest educational institution in Washington state, the University of Washington is home to thousands of undergraduate and graduates, many of whom are enrolled in the Foster School of Business and its Master of Supply Chain Management program. This accelerated, work-compatible program is designed to produce leaders in logistics and supply chain fields. The university also offers undergraduate courses and degrees in Labor Studies and International Business. The University of Washington’s main campus is in Seattle, but its branch campus in Bothell offers a certificate program in Operations Management and its Tacoma campus offers business degrees.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 12 SECTOR ANALYSIS

Washington State University Washington State University offers a bachelor’s degree in International business and a graduate certificate in Logistics and Supply Chain Management. The certificates provide supervisors and managers with the knowledge and skills to maximize their effectiveness in the workplace and advance their careers. The program focuses on stabilization and cooperation in supply chains to reduce waste and increase productivity. Beyond the main campus in the City of Pullman, Washington State University operates branch campuses in Everett, Spokane, the Tri-Cities and Vancouver.

Tacoma Community College Students who earn Tacoma Community College’s Associate Degree in Applied Science, Business can choose to concentrate in Global Logistics, and they complete a for-credit internship as part of the program. Students can also independently pursue a certificate in Global Transportation and Secure Logistics. This certificate program prepares students already active in the transportation and logistics industry, or those wishing to enter it, with the perspective to make the global movement of goods more efficient.

Shoreline Community College Shoreline Community College offers two programs in purchasing and supply chain management: an associate degree in Applied Arts and Sciences and a Certificate of Proficiency. Both programs are available online as part of the accredited Shoreline Community College virtual campus. They concentrate on all aspects of supply chain management, including sourcing, procurement, production, logistics and customer relations. Students enrolled in the required courses can earn three levels of certificates and the associate degree depending on the number of credits they earn.

North Seattle College Students at North Seattle College can earn a Bachelor of Applied Science in International Business degree and a certificate in International Business. These programs are for those already with business and accounting associate degrees or those seeking increased upward mobility in the international trade sector. Students learn the fundamentals of macro and microeconomic theory, evaluate foreign markets, demonstrate an understanding of operations management and become proficient in more than one language or culture.

Central Washington University A partner of Highline College, Central Washington University offers a certificate program for undergraduate students studying business. The

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 13 SECTOR ANALYSIS

university states that this program prepares students for careers as analysts, decision makers and managers in any and all segments of an organization’s supply, production and distribution chain. Students in the program have completed internships with leading regional companies like Boeing. 13

Western Washington University Western Washington University students can earn a Bachelor of Science in Manufacturing and Supply Chain Management (MSCM), completing an education covering the areas of operations management, business and engineering technology. Approximately 100 to 130 students participate in the program, and each completes two internships during their time of study. Some of the many companies at which MSCM students have interned include Boeing, Crane Aerospace, Microsoft, PACCAR and Target Distribution. Western Washington University reports that there is a high industry demand for the MSCM program, with 97 percent of graduates landing jobs like supply managers, purchasing managers, senior planners or others by graduation. 14

Gonzaga University While earning a bachelor’s degree in Business Administration at Gonzaga University, students can specialize in Operations & Supply Chain Management or International Business. Students who concentrate on Operations & Supply Chain Management learn about global sourcing and logistics, e-commerce, process management and international quality standards. The university states that these students find career opportunities in areas such as consulting, manufacturing, health services, government and transportation.

Pacific Lutheran University Undergraduate students at Pacific Lutheran University can earn a bachelor’s degree in Global Studies. The university also offers certificate programs in Maritime Management and Supply Chain Management. Students pursuing the certificate in Maritime Management focus on shipping, global transportation, international law, regulations and terminal operations. The latter certificate is open to anyone who has educational or employment experience in supply chains, logistics or operations.

13 Tasha, Central Washington University School of Business, http://www.cwu.edu/business/tasha. 14 Manufacturing and Supply Chain Management, BS, Western Washington University, https://www.wwu.edu/majors/manufacturing-and-supply-chain- management-bs.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 14 SECTOR ANALYSIS

Seattle Pacific University Seattle Pacific University students can earn a bachelor’s degree in Business Administration (with an optional specialization in International Business or Management), a Master of Business Administration degree and a certificate in Supply Chain Management. According to the Seattle Pacific University website, the certificate program “leverages expert (and local) knowledge from a premier Supply Chain professional from Boeing with over 40+ years of local, regional and global results” to provide students with a variety of tools and techniques for immediate business application.15

Eastern Washington University Eastern Washington University offers bachelor’s degrees in International Affairs, International Business and Business Administration. Business Administration students can specialize in Operations Management and International Business can also be earned as a minor. The International Business major focuses on the role of global business in both a host country and the world economy. Among the topics covered in the Operations Management option are planning, scheduling and supply chain and quality management.

Seattle University Undergraduate students at Seattle University can major or minor in International Business, and they can minor in International Economic Development. These degrees are offered by the Albers School of Business and Economics. In addition to taking required courses, International Business students can connect with global business leaders through the Global Business Club, the Mentor Program and the Albers Executive Speakers Series. Students have also engaged outside of the classroom through projects like MotMot Coffee, an award-winning social enterprise on campus that participates in real international business by dealing Nicaraguan coffee. 16

O R IG I N A N D D EST IN AT IO N MARKETS AND C ARG O H ANDLING

Washington is a major hub for both the import and export of goods between the U.S. and foreign markets and between origins and destinations within the U.S. In 2017, Washington state ports facilitated the movement of $172.3 billion in imports and exports across rail, truck, airplane and maritime vessel

15 “Continuing Education Certificate in Supply Chain Management,” Seattle Pacific University: http://spu.edu/academics/school-of-business-and- economics/professional-education/certificate-supply-chain-mgmt-insight. 16 “International Business,” Seattle University Albers School of Business and Economics: https://www.seattleu.edu/business/undergraduate/baba/international- business/.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 15 SECTOR ANALYSIS

modes (Exhibit 5). Some of these goods either originate or are destined for Washington state businesses, such as key components and raw materials used as inputs by local manufacturers. Likewise, a share of imports is destined for local markets to meet demand from local individual and household consumers. However, a significant share of trade, particularly imports, is handled in Washington but ultimately destined for the Midwest. The handling of this pass-through cargo is a value-added activity that benefits the Washington state economy and households.

After a low of $135.9 billion in imports and exports in 2009, trade through Washington ports returned to previous levels by 2011 and grew to a high of $182.3 billion in 2015. Imports have stayed fairly consistent between 2011 and 2017 with an average of $93.3 billion. Exports grew from 2011 to a high of $90.5 billion in 2015 but have tapered off in 2016 and 2017 with imports remaining at $92 billion.

Exhibit 5. International Trade, Imports and Exports through Washington State Ports, 2003-2017 (2017 $)

Sources: U.S. Census Bureau, 2018; Federal Reserve Bank of St. Louis, 2018; Community Attributes Inc., 2018.

Similarly, the amount of cargo by weight through Washington state ports has recovered from a low in 2009 of 15.7 billion kg. The recovery is not as noticeable in cargo weight, which has yet to reach an historic high of 23.1 billion kg in 2006. Since 2012, cargo weights have been fairly consistent, averaging 8.8 billion kg containerized cargo, 9 billion kg bulk and break-bulk cargo and 17.8 billion kg total. Containerized cargo (imports and exports)

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 16 SECTOR ANALYSIS

represented 54% of cargo weight between 2003 and 2017 (Exhibit 6). The vast majority of containerized shipments by value were in the form of imports ($54 billion in 2017, as compared with $13 billion in exports; Exhibit 7).

Exhibit 6. Marine Cargo through Washington State Ports, Imports and Exports (by weight), 2003-2017

Sources: U.S. Census Bureau, 2018; Community Attributes Inc., 2018.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 17 SECTOR ANALYSIS

Exhibit 7. Containerized Cargo by Value, Imports and Exports, 2003-2017 (2017 $)

Air cargo value has grown consistently over this period with exports outpacing imports for the majority of these years. Starting in 2014 imports are a noticeably greater share of the total value with imports making up 53% of the total in 2016. Air cargo value has grown significantly since 2013 while total international trade has remained flat over the same period (Exhibit 8).

Exhibit 8. Air Cargo Total Value, 2003-2017 (2017$)

Sources: U.S. Census Bureau, 2018; Federal Reserve Bank of St. Louis, 2018; Community Attributes Inc., 2018.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 18 SECTOR ANALYSIS

The aerospace industry is particularly reliant on domestic and international exports in Washington state. Other major industries reliant on imports (domestic and foreign) and exports include agriculture, forestry, fishing, hunting, mining and manufacturing. Exports make up 94 percent of total sales in the aerospace industry; combined with imports, estimated total trade in aerospace equaled 153% of sales in 2017 (Exhibit 9).

Exhibit 9. Industries in Washington Reliant on Imports and Exports, 2017 Estimate Total Exports as % Imports as % Total (Exports + Imports)/ Rank Industry Sales, 2017 Total Sales Sales Total Sales 1 Aerospace Products & Parts $66.7 94% 58% 153% 2 Petroleum & Coal Products $19.9 16% 84% 100% 3 Navigational/measuring/medical/control Instrument $6.6 39% 38% 76% 4 Pulp, Paper & Paperboard Mill Products $4.9 28% 50% 78% 5 Fruits & Veg Preserves & Specialty Foods $4.2 45% 50% 94% 6 Miscellaneous Manufactured Commodities $4.2 29% 42% 71% 7 Other Wood Products $3.6 3% 33% 36% 8 Plastics Products $3.5 16% 42% 58% 9 Sawmill & Wood Products $3.4 19% 33% 52% 10 Semiconductors & Other Electronic Components $3.2 39% 38% 77% 11 Seafood Prods, Prepared, Canned & Packaged $3.0 10% 50% 59% 12 Beverages $2.5 8% 50% 57% 13 Foods, Nesoi $2.4 24% 50% 73% 14 Dairy Products $2.4 27% 50% 76% 15 Meat Products & Meat Packaging Products $2.2 30% 50% 80% 16 Basic Chemicals $2.1 31% 59% 90% 17 Architectural & Structural Metals $2.1 4% 41% 45% 18 Other General Purpose Machinery $2.0 54% 38% 92% 19 Fruits & Tree Nuts $1.9 81% 16% 97% 20 Bakery & Tortilla Products $1.9 8% 50% 57%

Sources: U.S. Census Bureau, 2018; Washington State Office of Financial Management, 2017; Washington State Department of Revenue, 2018; Community Attributes Inc., 2018.

D I RE C T ACTIVITIES

Jobs, Wages, Business Revenues The following key metrics are reported by:

• All-in activities. Firms and industries primarily engaged in global trade and supply chain management, or what will be referred to as “all-in” activities; and • Other leading occupations. Additional jobs, wages, and revenues associated with workers engaged in global trade and supply chain management in other industries across the economy. In 2017, an estimated 94,000 workers were employed in businesses wholly or primarily engaged in global trade and supply chain management. The largest category of activities was intermodal & transloading, a group that includes marine cargo handling, rail, trucking, and reformatting cargo between 40- foot and 53-foot containers (59,200 jobs). The second largest category of jobs

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 19 SECTOR ANALYSIS

were in warehousing & storage, with an estimated 12,600 workers (Exhibit 10). Since 2010, industries engaged in global trade and supply chain management have increased by more than 26%, adding 19,700 jobs. This compares with statewide overall nonfarm employment growth of 17.1%, including 20.6% growth in software publishing, and 9.9% growth in manufacturing over this same period.

Intermodal & transloading added 11,900 jobs, followed by 3,300 jobs added among couriers, 2,500 in warehousing and storage, and 1,600 in freight forwarding. Air cargo, including cargo-specific ground-handling services, added an estimated 400 jobs over this period, representing a 50% increase. The largest gains in intermodal were in general freight long-distance trucking activities, which saw a 30.8% increase between 2009 and 2017 (net increase of 6,900 jobs); rail transportation added nearly 1,300 jobs over this period, representing a 45.2% increase.

Exhibit 10. Total (“All-in”) Jobs in Global Trade and Supply Chain Management, Washington State, 2001-201717

Sources: U.S. Bureau of Labor Statistics, 2018, U.S. Census Bureau, 2017; Community Attributes Inc., 2018.

Courier jobs have increased since 2010, following the growth of food delivery services offered by companies like Postmates, GrubHub and Uber Eats. Postmates was founded in 2011, and GrubHub and Uber Eats both launched in 2014. As of March 2018, Uber Eats was the dominant food delivery service in Seattle, followed by GrubHub.18 Amazon Restaurants, another food delivery service provided by drivers and bicyclers, was debuted in Seattle in 2015.

17 See definitions on pages 3 and 5. 18 Second Measure, “Food delivery market share in the most-populous cities,” March 2018.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 20 SECTOR ANALYSIS

King County was the largest hub for global trade and supply chain management jobs (Exhibit 11) with more than 40,000 positions. However, there were several other counties with sizable concentrations of jobs, such as in Spokane and Pierce counties (the latter owing to the Port of Tacoma facilities).

Exhibit 11. Map of “All-in” Jobs by County, 2017

Sectoral wages summed to more than $5.3 billion in 2017, or $56,400 per worker across all sectors. Total wages, after adjusting for inflation, increased 30% overall since 2010, while the sector-wide average wage increased 3% over this same period. Marine cargo shipping workers enjoyed the largest average wage in 2017, at $90,400 per worker, followed by air cargo shipping with an estimated wage of $89,400 (Exhibits 12 and 13).

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 21 SECTOR ANALYSIS

Exhibit 12. Wages (estimated) by Subsector among “All-in” Jobs, 2000- 2017 (2017 $)

Sources: U.S. Bureau of Labor Statistics, 2018, U.S. Census Bureau, 2017; Community Attributes Inc., 2018.

Exhibit 13. Average Wage, by Subsector, All-in Jobs, 2017 (estimated)

Sources: U.S. Bureau of Labor Statistics, 2018, U.S. Census Bureau, 2017; Community Attributes Inc., 2018.

Business revenues were estimated through use of gross business income data collected from the Washington State Department of Revenue. Sector revenues in 2017 reached $11.4 billion. Since a recent low in 2009, sector revenues have grown 38% in real, inflation-adjusted terms. The largest gains over this period were in freight forwarding, which saw revenues increase by more than $1.1 billion in real, inflation-adjusted terms, or 84% (Exhibit 14).

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 22 SECTOR ANALYSIS

Exhibit 14. Business Revenues by Subsector, 2000-2017 (2017 $)

Sources: U.S. Bureau of Labor Statistics, 2018, U.S. Census Bureau, 2017; Washington State Department of Revenue, 2018; Community Attributes Inc., 2018.

Occupations in Other Industries and Total Sectoral Direct Impact In addition to businesses primarily involved in global trade and supply chain management, there are a large number of workers in other industries also directly engaged in this work. Examples include procurement and logistics in aerospace, e-commerce and commodity producer industries such as agriculture. A list of relevant supply chain management positions was developed in consultation with educational institutions, other reports and occupational data sources. These positions are summarized for 2017 in Exhibit 15 below.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 23 SECTOR ANALYSIS

Exhibit 15. Leading Occupations in Global Trade and Supply Chain Management, Economy-wide, 2017 (Inside All-In and Other Industries)

Total Count, Economy- Type of Educational Occupation Description wide 2017 Requirement Purchase goods for further processing, resale or to enable operation of an establishment. These workers include wholesale and retail Associate's Degree buyers and purchasing agents for farm products, equipment and or Postsecondary Buyers and Purchasing Agents raw materials. 16,300 Award Coordinate and expedite the flow of work and materials within or Production, Planning, and between departments of an establishment according to a Expediting Clerks production schedule. 10,300 On the Job Training Examine, evaluate and investigate conformity with regulations governing licenses, permits and other inspections. Many of these Compliance Officers workers are employed by both public and private establishments. 9,500 Bachelor's Degree Analyze and coordinate an establishment’s supply chain. They manage the procurement, allocation and delivery of a product to Logisticians minimize the cost or time required to transport goods. 6,300 Bachelor's Degree Oversee the work of buyers and purchasing agents and typically Purchasing Managers handle more complex procurement tasks. 2,300 Bachelor's Degree Plan, direct or coordinate the transportation, storage and Transportation, Storage, and distribution activities of an establishment in accordance with Distribution Managers organizational policies and government regulations. 2,800 On the Job Training Compile information and records to draw up purchase orders for Procurement Clerks materials and services. 1,000 On the Job Training Expedite and route movement of incoming and outgoing cargo and freight shipments in airline, train, trucking and maritime shipping docks. They may prepare and examine bills of lading to determine Cargo and Freight Agents shipping charges and tariffs. 1,800 On the Job Training Coordinate the activities of ground crew in the loading, unloading, securing and staging or aircraft cargo or baggage. They may Aircraft Cargo Handling determine the quantity and orientation of cargo in an aircraft, and Supervisors they may monitor and handle cargo in flight. 100 On the Job Training Total 50,400 Sources: Washington State Employment Security Department, 2018; U.S. Bureau of Labor Statistics, 2018; Community Attributes Inc., 2018.

Supplementing these jobs estimates, further analysis was done to assess the number of workers in e-commerce engaged in supply chain management. Companies such as Amazon support global supply chain across an extensive range of activities, including logistics, transportation (e.g., Prime Air), and warehouses and fulfilment centers, as well as back office software engineering and data science to develop online platforms and systems for managing inventory, delivering products to consumers and working with third-party vendors. An estimated 23,000 workers were employed in e- commerce in roles and activities directly related to global trade and supply chain management.

Factoring in these considerations, there were a total of 62,800 workers employed in global trade and supply chain management activities across the economy and industries outside those identified as entirely belonging to the sector, such as manufacturing and wholesale. Workers engaged in supply chain management in other industries earned an estimated more than $7.0 billion in 2017 and supported revenues within their businesses of employment of $23.7 billion. Workers in these industries in many cases actually earned more than in industries fully engaged in global trade and supply chain management services; the average wage for these workers in 2017, before benefits, was $111,700, compared to $56,400 among the latter.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 24 SECTOR ANALYSIS

E-commerce jobs were the highest paying, with an average wage of $178,500 in 2017. Adding “all-in” industry employment of 94,200, e-commerce employment of 23,000, and global trade and supply chain management jobs in other industries of 39,800, the sum of employment in the sector is 157,000. (Exhibit 16)

Exhibit 16. Summary of Sector Activities in Washington State Wages Average Revenues Segment of Sector Jobs (Mils $) Wage (Mils $) A. Industry Subsectors ("All-in") Intermodal & Transloading 59,200 $3,292.0 $55,600 $6,661.8 Air Cargo Shipping 1,200 $107.3 $89,400 $143.5 Marine Cargo Shipping 2,700 $244.3 $90,500 $654.3 Freight Forwarding 7,600 $537.7 $70,700 $2,476.6 Warehousing and Storage 12,600 $646.8 $51,300 $1,142.2 Couriers 10,900 $485.1 $44,500 $299.0 Subtotal 94,200 $5,313.2 $56,400 $11,377.4

B. Supply Chain Management Workers in Other Industries Aerospace 9,200 $707.9 $77,000 $7,311.3 Agriculture and Food & Beverage Processing 700 $47.5 $67,800 $420.5 Other Manufacturing 3,800 $240.8 $63,400 $2,585.7 E-commerce 23,000 $4,105.4 $178,500 $7,245.0 Other Industries 26,100 $1,915.2 $73,400 $6,087.5 Subtotal 62,800 $7,016.7 $111,700 $23,650.0

Total (A+B) 157,000 $12,329.9 $78,500 $35,027.4

Sources: Washington State Employment Security Department, 2018; U.S. Bureau of Labor Statistics, 2018; Washington State Office of Financial Management, 2017; Community Attributes Inc., 2018.

E CO N O M I C I MPACTS OF THE S ECTOR

Sectoral impacts to the statewide economy are computed through use of the Washington State Input-Output Model. Estimates represent total jobs, labor compensation and business revenues supported directly and through upstream business-to-business transactions (indirect impacts) and worker and household income expenditures on goods and services (induced impacts).

In 2017, those businesses and activities accounted for as “all-in” for the global trade and supply chain management sector had a total statewide impact of 192,500 jobs, $12.3 billion in labor income (including benefits) and $27.9 billion in business revenues (Exhibit 17).

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 25 SECTOR ANALYSIS

Exhibit 17. Table of Economic Impacts, All-In Activities, Statewide, 2017

Direct Indirect Induced Total Jobs 94,200 26,500 71,800 192,500 Total Compensation (mils 2017 $) $6,914.5 $1,568.9 $3,802.3 $12,285.7 Business Revenue (mils 2017 $) $11,377.4 $5,279.9 $11,220.8 $27,878.1

Sources: Washington State Office of Financial Management, 2017; Community Attributes Inc., 2018.

These impacts can be translated into industry impact multipliers. For each job in global trade and supply chain management, a total of 2.0 jobs were supported across the economy. Likewise, each million dollars in final demand (revenues) supported, either directly or through multiplier effects, 17 jobs across the state (Exhibit 18).

Exhibit 18. Sector Impact Multipliers, All-In Businesses and Activities Type Multiplier Total output per $ final demand 2.5 Total jobs per direct job 2.0 Total compensation per $ direct income 1.8 Total jobs per $ mil final demand 16.9

Impacts are also assessed for workers and related activities outside the above “all-in” industries, such as supply chain jobs and associated income and revenues among e-commerce and manufacturing businesses. For example, in 2017 these activities had a total statewide impact of 170,600 jobs and $14.6 billion in labor income (Exhibit 19). For each job engaged in supply chain management in a manufacturer, e-commerce, or other industry across the state, a total of 2.7 jobs are supported throughout the state economy due to higher wages (Exhibit 20).

Exhibit 19. Table of Economic Impacts, Activities in Other Industries, Statewide, 2017

Direct Indirect Induced Total Jobs 62,800 22,200 85,600 170,600 Total Compensation (mils 2017 $) $8,736.9 $1,375.0 $4,532.2 $14,644.1 Business Revenue (mils 2017 $) $19,716.1 $4,264.1 $13,374.8 $37,354.9

Sources: Washington State Office of Financial Management, 2017; Community Attributes Inc., 2018. Note: reported direct revenues in the impact summary above is less than reported in the summary table of direct revenues earlier in this report. This is due to an adjustment, for the purposes of impact modeling, in gross margins for retail and wholesale activities.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 26 SECTOR ANALYSIS

Exhibit 20. Sector Impact Multipliers, All-In Businesses and Activities Type Multiplier Total output per $ final demand 1.9 Total jobs per direct job 2.7 Total compensation per $ direct income 1.7 Total jobs per $ mil final demand 8.7

I LLUSTRATIVE COMPANIES

Transportation, Distribution, and Logistics (TDL) Washington state is home to 75 public ports, ranging from major containing loading centers such as the Ports of Tacoma and Seattle (Northwest Seaport Alliance), breakbulk operations at the Port of Grays Harbor, to smaller ports along the Columbia and Snake Rivers serving the bulk grain trade.

Rail Transportation There are two class I railroads in Washington state—Burlington Northern Santa Fe (BSNF) and Union Pacific—and 23 short-line railroads, many supporting the agriculture industry in Eastern Washington. The Washington State Department of Transportation owns the Palouse River and Coulee City (PCC) rail system, the longest short-line freight rail system in Washington. WSDOT contracts with private railroads to operate each of the branches.19

• Burlington Northern Santa Fe (BNSF) is the larger of the two rail operators in Washington state, with nearly 3,800 employees and combined payroll in 2017 of more than $304.6 million. BNSF owns 1,334 miles of rail track and in 2017 handled more than 1.7 million car loadings in Washington. BNSF’s physical presence in Washington includes intermodal facilities in Seattle (Seattle International Gateway) and Spokane, railyards in Auburn, Bellingham, Centralia, Everett, Pasco, Seattle (Seattle International Gateway), Spokane, Tacoma, Vancouver, Wenatchee, Wishram and Yakima, and repair shops in Seattle, Spokane and Vancouver.20 • Union Pacific (UP) as of 2017 employed a reported 322 employees with an annual payroll of $28.5 million. Serving all major West Coast ports, Union Pacific supports the global supply chain by connecting 23

19 “Freight Rail,” Washington State Department of Transportation, http://www.wsdot.wa.gov/Freight/Rail/ (accessed June 4, 2018). 20 “BNSF in Washington,” BNSF, https://bnsfnorthwest.com/washington/ (accessed June 4, 2018).

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 27 SECTOR ANALYSIS

states by rail. UP owns and operates 532 miles of track and the Argo intermodal facility in Seattle.21 Air Cargo A range of businesses provide air cargo services. These include large employers such as Delta (which has its own workforce for air cargo ground handling and delivery), and businesses that provide express services such as FedEx, Amazon’s Prime Air and DHL. Major third-party ground handling services include Swissport, WFS and Hanjin Global Logistics. Matheson provides both on and off-airfield air mail processing for the United States Postal Service.

In 2017, an estimated 425,860 metric tons of air cargo was loaded or unloaded at Sea-Tac International Airport alone, 16% more than in 2016. Of this, 43% by tonnage was delivered via express/integrated freight/own- network operations and 31% was delivered by belly freight. Air mail shipments constituted another 14% by tonnage, followed by other freighters (discretionary and allied freight) at 12%.22

Marine Freight and Transloading Services There are marine freight handling facilities across Western Washington. These include at the ports of Vancouver, Longview, Grays Harbor, Tacoma, Seattle and Bellingham. Marine cargo includes shipping, stevedoring, terminal operations and transloading. Marine freight destined for or departing from Washington ports ranges from containerized, break bulk (e.g., automobiles, other non-containerized machinery) and bulk (e.g., grain). Shipping activities include both international and domestic shipping lines, such as TOTE Marine serving commerce between Alaska and the lower 48 states. Examples of businesses in this segment include:

• SSA Marine was founded in 1949 as Bellingham Stevedoring Company and has since grown into a major cargo handling company with more than 250 locations worldwide. Handling over 113.1 million tons of cargo annually, SSA Marine facilitates loading and unloading of breakbulk, roll-on/roll-off, bulk and perishable goods, as well as intermodal services through its affiliated company Rail Management Services. In Washington, SSA Marine operates 11 terminals in 8 port cities, including Seattle, Tacoma and Everett. • Crowley Maritime Corporation was founded in San Francisco in 1892 and expanded operations into Puget Sound in 1923. Now

21 Union Pacific, “Union Pacific in Washington,” https://www.up.com/cs/groups/public/@uprr/@corprel/documents/up_pdf_nativedoc s/pdf_washington_usguide.pdf (accessed June 4, 2018). 22 Port of Seattle, Sea-Tac International Airport Economic Impacts, January 2018, p.12.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 28 SECTOR ANALYSIS

headquartered in Jacksonville, Florida, the company provides a wide range of services, such as container shipping logistics, freight forwarding, ocean towing, barge transportation and vessel construction management. In Seattle, Crowley also offers tanker escort and harbor ship assistance. • MacMillan-Piper is one of the Pacific Northwest’s largest drayage companies. The business has five facilities located in the region and leverages 49 years of experience in the transloading and container freight industry to efficiently move cargo for a wide variety of clients. MacMillan-Piper is partnered with Washington’s two largest freight railway companies, BNSF and Union Pacific, providing a link between Washington’s rail network and its marine terminal assets. Trucking Services A key element in the statewide Global Trade and Supply Chain Management sector is ground transportation. Trucking services enable transfer of cargo between ships and trains (drayage), from ships to warehousing facilities, warehouses to businesses and consumers, and between businesses domestically. Examples of trucking companies include:

• Allstate Transport performs “drayage of ocean containers from the Ports of Seattle, Tacoma and Portland and deliver[s] reliable service to all of Washington State and Northern Oregon.” Through its affiliated company Seattle Port Consolidators, Allstate Transport also provides container loading, unloading and general transloading services. The company has current Interchange Agreements with many steamship lines, rail providers and barge lines, including APL Limited, BNSF, Horizon Lines, Maersk, Nippon Yusen Kaisha, Union Pacific and numerous others. No information is easily accessible online about Allstate Transport’s number of employees. • United Motor Freight. United Motor Freight is a transportation company that offers services such as unloading cargo from steamships, transporting cargo directly to container freight stations, transloading, and arranging for transportation from ports to final inland destinations. The company owns and operates freight stations in Tacoma and Seattle, including a 130,680-square feet warehouse and a 6.5-acre yard, as well as 24 trucks that provide movement of cargo throughout Washington state and other states in the Northwest. No employment information is easily accessible online for United Motor Freight, but the company calls itself “the leading project cargo, long and heavy haul, and drayage and intermodal delivery company in the greater U.S. and Canadian Pacific Northwest region.” • Heartland Express. Heartland Express is a major truckload carrier based in North Liberty, Iowa, serving shipping lanes across the United States. In 2017, the company acquired Interstate Distributor Co. for

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 29 SECTOR ANALYSIS

approximately $113 million, increasing its presence in Tacoma and its services such as long-haul trucking, irregular route shipping, intermodal services, logistics and warehouse services. When IDC was acquired, it owned a fleet of approximately 1,350 tractors and 4,700 trailers, and it operated in the Seattle-Tacoma region, Oregon, Southern California, Phoenix and Nashville. Little to no information is easily accessible online on Heartland Express’ employment numbers. • Trans-System. Trans-System, based in Cheney, Washington, is the parent organization for three transportation companies that make up a fleet of nearly 1000 tractors: System Transport, TW Transport and James J. Williams. According to its website, “System Transport is the largest flatbed carrier based on the West Coast,” and it offers long- haul trucking, third party logistics and regional trucking in areas such as the Pacific Northwest. TW Transport is a refrigerated service transportation company that operates primarily in western states. James J. Williams transports dry and liquid bulk freight in the Pacific Northwest with 80 trucks and 115 trailers. No employment information for these companies is easily accessible online. • Oak Harbor Freight Lines. Founded in 1916, Oak Harbor Freight Lines primarily provides less than truckload (LTL) shipping. It also provides logistics services for businesses requiring truckload, partial- load, flatbed, refrigerated and intermodal shipping, as well as freight forwarding, importing/exporting and warehousing. Oak Harbor operates 35 terminals, with 8 in Washington state, and employs over 1,300 total workers. Freight forwarding and warehousing Freight forwarders range from large, multinational operations such as Expeditors International, which deals with both air and marine cargo, to smaller family-run operations that specialize in a product or cargo type. Freight forwarding and warehousing entail a suite of services on behalf of shippers. These include: tracking inland transportation, preparation of shipping and export documents, storage, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and filing of insurance claims.23 Examples of these service providers in Washington include:

• Expeditors provides a variety of logistics services including freight forwarding, warehousing, supply chain consulting and transportation by air, ocean, truck and rail. Headquartered in Seattle, over 16,500 Expeditors employees operate in locations across 103 countries. In 2017, 42 percent of the company’s $6.92 billion revenue came from operations related to air transportation and 30 percent came from the

23 Business Dictionary, “Freight Forwarder,” http://www.businessdictionary.com/definition/freight-forwarder.html (accessed June 4, 2018).

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 30 SECTOR ANALYSIS

ocean transportation sector. The many industries served by Expeditors include retail, healthcare and aerospace. • Lynden is a family of 15 transportation and logistics companies headquartered in Anchorage and Seattle, near Sea-Tac Airport. Working primarily in the U.S. and Western Canada, they also have operations around the globe. Their services include trucking, barges, air freight, international freight forwarding and customs brokerage, sanitary bulk hauling and multi-modal logistics. • Lineage Logistics is a warehousing and logistics company with over 100 facilities across the United States. 11 of these locations are in Washington state, including 3 port facilities in Seattle and Tacoma. Specialized in food storage, Lineage Logistics offers refrigerated warehousing, seafood processing, export/import services and rail and truck transloading. • Radiant Global Logistics is a global transportation and supply chain management company headquartered in Bellevue, Washington. Since its launch in 2005, the company has acquired a network of brands, such as Airgroup, Adcom Worldwide and Wheels Group, which have expanded Radiant Logistics’ reach to more than 100 locations in the United States, Canada and worldwide. Radiant Logistics serves an array of industries with import/export management, warehousing, assembly and transportation by air, ocean, truck and rail. Materials Handling There are several companies in Washington state which sell and lease materials handling equipment. DACO Corporation, for example, is based in Kent, Washington and offers pallets, conveyors, lift tables, cleaning items and other supplies to materials handling companies and companies with loading docks. Suppliers like DACO also have special equipment for the safe and secure handling of agricultural products and seafood. 24

Materials handling equipment extends to vehicles as well. Papé Material Handling offers forklifts, railcar movers, aerial positioning devices and container handlers from 8 locations in Washington state.25 These are used in ports, container yards and warehouses.

24 DACO Corporation, “Contact Us,” 2018: https://www.dacocorp.com/contact-us. 25 Papé Material Handling, 2018: https://www.papemh.com/.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 31 SECTOR ANALYSIS

Supply Chain Management in Other Industries E-Commerce This industry is dominated by Amazon, which has approximately 566,000 employees worldwide26 with many who call Washington state home. The company’s fulfillment services consist of obtaining and warehousing inventories, processing customer orders and transaction costs, packaging items and supply chain management for Amazon’s manufactured electronic devices.27 Additionally, Amazon Logistics coordinates with local delivery providers to transport packages from central locations such as the company’s fulfillment centers. Amazon Seller Central also allows individual businesses to import and sell products through Amazon.com, connecting these sellers with container and truck shipping companies.

While the majority of the company’s 45,000 employees are located at its corporate headquarters in Seattle, there are also many thousands of others in Washington state in supply chain-related occupations. Approximately 2,500 employees are located at fulfillment centers in Kent, DuPont and Sumner.28 Supply chain activities at AmazonFresh and Whole Foods Market, both subsidiaries of Amazon, also have a strong presence in the state.

Local Manufacturers Boeing, Paccar and many other firms engaged in product assemblage rely on the importation of key components and raw materials, either from overseas or other parts of the U.S. Similarly, many of these firms are active exporters and rely on workers skilled in international trade and sales.

Supply Chain Services Compliance and Certifications While most larger companies have their own internal compliance departments, Allocca Enterprises is an example of a firm that provides

26 Amazon.com, Inc., Form 10-K 2017, retrieved from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1018724/000101872418000005/amzn- 20171231x10k.htm. 27 Ibid. 28 Todd Bishop, “Amazon hiring 1,200 people at new fulfillment center in Seattle region,” GeekWire, January 18, 2016, https://www.geekwire.com/2016/amazon- hiring-1200-people-at-new-fulfillment-center-in-seattle-region/; John Gillie, “Amazon formally opening new DuPont fulfillment center Friday,” The News Tribune, February 12, 2015, http://www.thenewstribune.com/news/business/article26254849.html; Angel Gonzalez, “Amazon to open new warehouse in Sumner,” The Seattle Times, June 1, 2017, https://www.seattletimes.com/business/amazon/amazon-to-open-new- warehouse-in-sumner/.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 32 SECTOR ANALYSIS

training to smaller businesses on trade finance and compliance with import and export laws.29

Law firms that specialize in International Trade in Arms Regulations (ITAR) provide another support service to exporters. ITAR is comprised of federal regulations designed to control the trade of defense-related technology.30

Trade Finance Trade finance encompasses the handling of payments and financing of international sales and purchases. It can be divided into four types of finance: providing cash in advance (when trade buyers lack strong credit), handling letters of credit, documentary collection and creating open account payment terms.31 Banks that provide these services include U.S. Bank, Chase Bank, Wells Fargo, Bank of America and the Export-Import Bank.

The Export-Import Bank exists as a U.S. government corporation, supporting transactions that private banks ordinarily would not. Export credit insurance, which covers financial and political risks of international trade, comprises a bulk of its transactions.32

Managing procurement costs, receiving payment and paying bills are all aligned in the supply chain, from procurement to sales. Examples of banks that offer small and medium enterprise (SME) financing for trade include Banner Bank, Umpqua Bank and Washington Trust Bank.33

29 Interview with Doug Kemper, Director of International Banking, Washington Trust Bank, June 8, 2018. 30 Ibid. 31 Interview with John Brislin, Regional Director, Export-Import Bank of the United States, June 21, 2018. 32 Ibid. 33 Interview with Doug Kemper, Director of International Banking, Washington Trust Bank, June 8, 2018.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 33 SECTOR ANALYSIS

S TRATEGIES FOR S UPPORTING CONTINUED G ROWTH IN THE S ECTOR

Analysis and stakeholder interviews informed a set of recommended strategies for continued to growth in the sector as follows:

• Invest in curriculum and training for students to use new technology tools. These include integration of big data and analytics. In most cases, students need to be able to use technology tools and/or be able to quickly adapt to and leverage these technologies as part of many supply chain management positions, such as in procurement, customer sales, inventory management and dispatching. These tools include transportation management systems, warehouse management systems, yard management systems and connectivity and visibility systems, e.g., systems that connect various components and players within a supply chain and allow for real-time tracking of physical goods in movement. • Support internships and apprenticeships. In industries such as marine cargo handling, employers put a premium on workers who’ve had some experience working in multiple aspects of the business. For administrative and executive positions, this includes time earlier in one’s career doing physical work, or “hardhat labor,” on a pier, even if just a summer work experience. • Work to increase the pipeline of truck drivers. Among the greatest workforce shortages right now is in trucking. This owes partly to perceptions of the trucking perception and attendant challenges of the work, but also more recently enforcement of work hour quotas, limiting the amount of drive time truckers can do in day and creating demand for new workers. • Ensure soft skills are included in education and training opportunities. Interviewees expressed concern over the writing skills of post-secondary students in supply chain management degreed programs. International interest and experience, such as time spent overseas either for work, education and travel, is still highly valued by employers. According to one interviewee, workers who have not been exposed to foreign cultures sometimes lack the cultural sensitivities and awareness needed when working with foreign suppliers and clients. According to one interviewee, the preferred job candidate in international sales and supply chain management has technical skills, global experience, language experience, a sufficiently robust understanding of the technology product(s) of the company and preferably a master’s degree. Some of this could also be accomplished through outreach activities to middle and High School students on a career path.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 34 SECTOR ANALYSIS

• Engage employers that represent all industries in the economy for talent placement. Job placement is primarily in industries outside the “all-in” groupings identified in this report. According to educational stakeholders, the majority of graduates from supply chain management programs find employment among manufacturers, e- commerce firms and other businesses that depend on extensive supply chains. • Offer training programs in intermodal and transloading, warehousing and freight forwarding. There has been significant growth in these occupations over recent years and programs focusing on their required skills would serve students well.

S UMMARY AND C ONCLUSI ONS

The global trade and supply chain management sector in is large, diverse in activities and critical driver of wealth creation and economic development in Washington state. The sector includes near all phases in the movement of physical goods—imports, exports and domestic trade—including raw materials, intermediate components and final consumer products.

In this study, the sector was evaluated in two levels. Firstly, all businesses and organizations directly and primarily engaged in services for the movement of goods were grouped together as “all-in” operations. These include carriers, courier services, air and marine cargo handling, trucking, rail operations, warehousing, freight forwarding and materials handlers. These operations employed an estimated 92,400 workers in Washington state, more than the aerospace sector in the same year. The average wage, before benefits, among these businesses was $56,400 per worker, though some industries, such as marine cargo shipping and air cargo shipping, paid above or nearly $90,000 on average.

A second category of activities are those additional jobs among businesses in other industries that, while not entirely engaged in the sector, conduct many of the same roles in such areas as freight cargo handling, logistics and procurement. The largest single employer of supply chain management workers was Amazon, whose business model includes a range of activities tied to optimizing the location, storage and transport of goods between suppliers, producers and end user customers. The aerospace industry, likewise, has an extensive number of logisticians, purchasing agents and other supply chain positions critical to the receipt and assembly of major aircraft parts. There were an estimated 62,800 such workers in Washington state in 2017, with average annual earnings of $111,700.

The economic impacts of these activities reach into nearly every corner of the state economy. In 2017, “all-in” operations had a total economic impact of 192,500 jobs, $12.3 billion in labor income and $27.9 billion in business

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 35 SECTOR ANALYSIS

revenues. Work tied to supply chain management in other industries across the economy had a total economic impact of 170,600 jobs, $14.6 billion in labor income and $37.4 billion in business revenues.

A P P EN D IX A. I N T E R V IE W L IST

Category Organization Individual(s) Education North Seattle College Jesse Cooley, Honorio Todino Education Central Washignton University Carlo Smith Education Highline College Steve Lettic Local Business PACCAR Sharon Sidoine Logistics SSA Marine Joe Ritzman Logistics (warehousing) City of Kent Bill Ellis Ports Northwest Seaport Alliance Larry Kvidera Shipping Pacific Merchant Shipping Association Jordan Royer Supporting Services Supply Chain Visions Alan Van Boven Trade Finance Washington Trust Bank Doug Kemper Trade Finance Export-Import Bank John Brislin

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 36 SECTOR ANALYSIS

A P P EN D IX B. F U L L L I S T O F P RO G RAM S O F F ER ED IN W AS H IN G TO N S TATE

Institution Type Associate Bachelor's Certificate Department Master's Minor Other International Business Bellevue College CTC International Studies* Business Management* Professions*

Commercial Automotive Bates Technical Truck Driving CTC Parts/Inventory/ College License Warehousing* Training*

Bellingham Technical Operations CTC Diesel Technology* College Management

Commercial Big Bend Community Truck Driving CTC College License Training*

Centralia College CTC Applied Clark College CTC Diesel Technology* Diesel Technician Management Aviation Clover Park Technical Operations Aviation Maintenance CTC Maintenance College Management Technician Technician* Edmonds Community CTC International Business* College Nippon Everett Community CTC Business College Institute* Advanced Diesel Technology; Business Management; Business Commercial Organizational Grays Harbor College CTC Management*; Transportation and Management Diesel Technology* Maintenance*; Diesel Technology Fundamentals; Diesel Technology Levels 1-5

International Global Trade Highline College CTC Business and Trade* and Logistics

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 37 S E C T O R ANALYSIS

Institution Type Associate Bachelor's Certificate Department Master's Minor Other Transportation, Diesel and Heavy Lake Washington Logistics, and CTC Equipment Institute of Technology Supply Chain Technician* Management*

Diesel/Heavy Lower Columbia CTC Equipment College Technology*

Industrial Trades Olympic College CTC Technician*

Diesel and Heavy Equipment International International Business Seattle College District CTC Technology Business (North)* (North)* (South)*

Purchasing & International Trade; Shoreline Community CTC Supply Chain Purchasing & Supply College Management* Chain Management

Business Management*; Marine Diesel Power Skagit Valley College CTC International Studies* Maintenance Technology*; Technology Operations Management

General Warehouse Tacoma Community Business, Global Clerk*; Global Logistics; CTC College Logistics* Global Transportation and Secure Logistics*

Advanced Diesel Technology; Advanced Walla Walla CTC Diesel Technology Truck Driver Training; Community College Diesel Technology; Truck Driving Training*

Hospitality and Whatcom Community Hospitality and Tourism CTC Tourism Business College Business Management Management*

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 38 S E C T O R ANALYSIS

Institution Type Associate Bachelor's Certificate Department Master's Minor Other

Business-Supply Central Washington Supply Chain Wine Trade University Chain University Management* and Tourism Management*

International Affairs*; International Eastern Washington International University Business*; University Business* Management, Operations Management

Business Administration, Operations & Supply Chain Gonzaga University University Management*; Business Administration, International Business

Maritime Pacific Lutheran University Global Studies* Management*; Supply University Chain Management

Business Administration, MBA, Seattle Pacific Supply Chain University International International University Management Business/ Business Management

International Business; International Seattle University University International Business* Economic Development*

Business & University of Puget Leadership, University Sound International Business*

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 39 S E C T O R ANALYSIS

Institution Type Associate Bachelor's Certificate Department Master's Minor Other

Supply Chain Management; University of International Studies in University Supply Chain Labor Studies* Washington Business* Transportation & Logistics*

Washington State International Logistics and Supply University University Business* Chain Management*

International Business*; Manufacturing Western Washington and Supply International University University Chain Business Management; Operations Management*

Organizational Whitworth University University Management

TOTAL 34 18 20 19 4 5 8 8

Note: * = listed on the Center of Excellence for Global Trade & Supply Chain Management website

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 40 S E C T O R ANALYSIS

A P P EN D IX C. E CO N O M IC I M P AC T T E CH N IC A L A PPENDIX

Data Sources Used in 2018 Study The following is a summary of data sources used in the economic impact analysis of the Global Trade and Supply Chain Management Sector.

State and Federal Data Sources Gross Business Income The Washington State Department of Revenue reports gross business income data on the state’s registered businesses. This information is presented from the two- to the six-digit North American Industry Classification System (NAICS) level and can be accessed at: http://dor.wa.gov/content/aboutus/statisticsandreports/TID/StatisticsReports. aspx?query=gbinaics.

Washington State Input-Output Model The Washington State Office of Financial Management publishes a state- level input-output model similar to that produced by the U.S. Bureau of Economic Analysis, but with custom representation of industries and activities in Washington. The 2007 and 2002 editions of the model are available at: http://www.ofm.wa.gov/economy/io/.

Quarterly Census of Employment and Wages (QCEW) The QCEW represents job counts and associated wages for covered employment, as reported to the Unemployment Insurance (UI) programs of the United States. Employment totals are reported by two- to six-digit NAICS code. Both the Washington State Employment Security Department and U.S. Bureau of Labor Statistics publish the QCEW data series. This data was used to estimate direct employment and wages.

Non-employer Statistics (NES) NES is an annual series that provides subnational economic data for businesses that have no paid employees and are subject to federal income tax. NES data is reported by two- to six-digit NAICS code and is published by the United States Census Bureau. This data was used to adjust QCEW covered employment to include self-employed workers, which are excluded from QCEW.

State Industry-Occupational Matrices The Washington State Employment Security Department also provides information on the state’s occupational-industry composition. Data is drawn from the same survey data as the table published nationally by the U.S. Bureau of Labor Statistics. Data is available at:

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 41 SECTOR ANALYSIS

https://fortress.wa.gov/esd/employmentdata/reports-publications/industry- reports/employment-projections

Inflation Adjustments Implicit price deflators and the consumer price index, published by the U.S. Bureau of Economic Analysis and U.S. Bureau of Labor Statistics, were used to adjust transactions and wages.

Direct Economic Impact Estimates Direct economic impacts were estimated for:

• Firms and industries primarily engaged in global trade and supply chain management, or what will be referred to as “all-in” activities; and • Additional jobs, wages and revenues associated with workers engaged in global trade and supply chain management in other industries across the economy. Direct Jobs Estimates Direct jobs for “all-in” activities were estimated using QCEW data by NAICS for those industries defined as primarily global trade and supply chain management: air cargo shipping, marine cargo shipping, freight forwarding, couriers, warehousing & storage and intermodal & transloading. NES data was used to produce a more accurate count of workers by industry that includes self-employed workers, not represented in the QCEW.

Direct jobs estimates for the list of occupations engaged in global trade and supply chain management in other industries were estimated based on those workers employed in occupations identified as global trade and supply chain management vocations. The industry-occupational matrices published by the Washington State Employment Security Department were used to estimate the share of employment per industry in these occupations. These percentages were then applied to 2017 updated NAICS-based jobs totals based on covered employment published by the U.S. Bureau of Labor Statistics. These jobs were then added to job count totals.

Direct Wage and Revenue Estimates Direct wages and revenues were estimated using data published by Washington State Employment Security Department and the Washington State Department of Revenue on total wages and gross business income by industry codes.

Total Economic Impact Estimates Economic impacts were estimated by way of an input-output modeling approach. The 2007 Washington State Input-Output (I-O) Model was the

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 42 SECTOR ANALYSIS

primary analytic tool for evaluating economic impacts of the global trade and supply chain management sector. The I-O Model represents a rendering of the state economy, including inter-industry transactions, covered and total employment, labor income (including benefits), other value-added payments (e.g., dividend payments) and final demand, composed of household consumption, state, federal and local government purchases, exports and investment. The Washington State Office of Financial Management publishes the I-O model, along with annual industry-specific deflators. All economic impacts are measured as revenues, jobs and labor income (wages plus benefits).

Three types of impacts were estimated:

• Direct Impacts, which relate to the direct activities of businesses wholly or primarily engaged in global trade and supply chain management and workers engaged in global trade and supply chain management in other industries across the economy. • Indirect Impacts, which encapsulates the activity and employment supported through upstream business-to-business transactions, as a result of the procurement of goods and services by businesses in the global trade and supply chain management sector; and • Induced Impacts, comprising the wider economic benefits that arise from worker and household income expenditures, for example on local retail and leisure establishments.

CENTER OF EXCELLENCE FEBRUARY 2019 P A G E 43 SECTOR ANALYSIS